And we’re not seeing big shifts in behavior at this point. And so we’ll see how that goes over the coming quarters. But there’s still a lot of uncertainty in the assumptions that you go through that you have here. And so you got to make your best judgment on what you think is going to happen. But as you get closer to the end of the rate cycle, you’ve probably seen a lot of the mix shift and repricing happening already. And so we’ll see how that goes.
Charlie Scharf: And can I just add?
John Pancari: Thank you. Yeah.
Charlie Scharf: Just even just more broadly, just to be clear about, we don’t — we’re not looking specifically at giving guidance in terms of 2024 yet. But at the same time, just more broadly speaking, we are and have been out-earning in NII. And we’ve been very clear about that as we talk about getting towards our 15% ROTCE targets. It’s in a more normalized environment. But at the same time, there are a series of things that we expect to be able to do as we look forward. A big part of it is growing the fees in the business as Mike spoke about. We’re not constrained by the asset capital in our existing businesses. And a lot of the things that we’re doing, whether it’s in our wealth business, whether it’s in the card business, whether it’s in the corporate investment bank or middle market as well, we do expect to see the fruits of that labor.
At the same time, we continue to stay very focused on expenses. And then the other thing I would just remind everyone is there’s lots of conversations around charge-offs and things like that. But remember, we are all required when we think about CECL to be as forward-looking as we possibly can. You all know how we come up with the different scenarios. And so the level of reserving that’s been running through our P&L, I think this is the fifth consecutive quarter we’ve added to reserves, which is what’s impacting the EPS of the company, has been based upon an environment which at some point will be very different than what the expectation is sitting here. So I think, you add all those things together, and I just think it’s important you think about all those things as opposed to just NII itself.
Next question, operator.
Operator: Certainly, we’ll move on to Betsy Graseck of Morgan Stanley. Your line is open.
Betsy Graseck: Hi, good morning.
Charlie Scharf: Hey, Betsy.
Betsy Graseck: Just two follow ups. One on the reserve build in commercial real estate, and I know you discussed a bit already. I just wanted to understand how much of that was coming from really California, we all know there was a property that traded on California Street that sold at discount. So I’m just wondering how much of it is California office versus anything more broader based beyond that? Thanks.
Mike Santomassimo: Yeah, Betsy, it’s not isolated to California. I mean I think you see weakness in a lot of cities these days and it really comes down to property specific stuff. And even in California, we’ve got as many examples where clients are actually reinvesting in buildings, even if lease rates are low or even empty in some cases as they are going into a workout. So I think it really depends on building, borrower and all the things we sort of talked about in the script and it’s less focused on just California.
Charlie Scharf: Yeah, and I just want to reemphasize what Mike is saying and we talked about this in the prepared remarks, which is we have all spent a bunch of time going through a very detailed review of the office portfolio. Just the other day, we went through just a whole series of things that we’re seeing. And I just really want to make the point, which I said in my script, it’s not — it’s a very big mistake to think about loss content by looking at just where the property is. Again, we have examples in cities that are struggling where the structure of our loan is quite good. The underlying property has very high lease rates for an extended period of time. And then we can have a loan in a market which is doing well. But for whatever reason, that property — the specific issue in that property, there are a bunch of potential termination dates in the shorter term.
